The lease deposit scheme was introduced to stop all disputes over the return of deposits once the lease was over. If there is any dispute, an arbitrator will assess the property and make a decision as to whether all or part of the deposit should be released to the owner. The idea behind this was that less scrupulous owners kept deposits regardless of whether they should or not, and many of them used the deposits as part of their daily cash flow. So in terms of protecting the tenant from the landlord, it’s a quality plan, but due to the nature of the deposits (and not the plan), the tenants were always going to be the ones to benefit anyway.

And that is where the problem lies. In a world where everyone behaved honorably, there would be no need for a lease deposit scheme, because there would be no need for deposits. But because we don’t live in that world, we need something, and in large part the lease deposit scheme is the reason for this.

Let’s start by looking at the scheme and how it affects homeowners in reality. There are 2 types of scheme, type 1 you pay the money into a government approved account. Type 2 is an insurance plan and a bit more expensive. Whichever scheme you use, you must notify the tenant of the details of the deposit scheme you are using within 14 days of receipt of the deposit. Failure to do so may result in the following: the tenant being awarded three times the deposit money, and they still have to put the money into the plan, and while the money is not in the plan, they cannot repossess of the tenant’s property. At the end of the lease you are supposed to view the property for a “verification inspection” and if you think there are any issues for which you should be given some or all of the deposit then you should find a claimant. route, and an advisor will decide. This part has the potential to work, where it fails (as it does with any deposit-based arrangement) is that a tenant will often not pay last month’s rent in lieu of the deposit, and if the place is a mess, well, your picking up that tab too.

In my experience, repositories don’t work and have no use, and not just for all of the above reasons. Many good quality tenants are turned away every day because they don’t have enough money to pay rent up front and a deposit. All levels of ‘class’, from the aristocracy to the people with benefits, are full of good and bad people. Having more money than someone else does not make you a better or more honorable person; however, people who cannot find two months’ rent cannot find a place to live.

Deposits also don’t work because nine times out of ten, if you really need the deposit at the end of the lease, there’s a good chance a month’s rent won’t cover the damage or rent arrears. We all have tenants who treat our properties like their own and pay rent in full on time month after month. It is the minority with whom we need help; not only will they leave your property in a mess, but they will also leave with arrears.

So how do I protect my properties and those I manage on behalf of other owners? The answer is the guarantor, because when you get the right one, you never have a problem.

So who is the right guarantor? The correct guarantor is the homeowner and a family member. Why are they the right guarantor? First of all, if your parent/brother/sister/aunt/uncle/grandparents aren’t ready to co-sign your tenant, something is wrong and you don’t need to do any more references or credit checks. And second, there is nothing more embarrassing or more likely to provide the answer you want than a family member calling to ask why they just received a letter threatening legal action for nonpayment of rent. I can assure you from personal experience that it only happens once.

The idea of ​​this article is not to criticize the rental deposit scheme, but rather to highlight that there are better ways to secure your property and future rent.